World economy bottoming out – Kiel IfW institute

11 June 2009 14:43  [Source: ICIS news]

TORONTO (ICIS news)--The world economy has reached its bottom after a breathtaking decline in global production in the first quarter, Germany-based Kiel Institute for the World Economy (IfW) said on Thursday.

A number of indicators increasingly pointed to stabilisation of output in the course of the summer, it said.

World trade had been stabilising after January, with foreign trade in emerging countries even slightly rising.

At the same time commodity prices had started to recover, the institute said.

Industrial production was showing increasing signs of bottoming out, and economic sentiment indicators, while still at very low levels, had started to improve, it said.

However, the recovery would be modest by historical standards.

Global GDP was expected to shrink 1.5% in 2009 – compared with IfW’s earlier forecast of a 0.8% decline - before growing 2.3% in 2010, the institute said.

IfW sees the US economy falling 2.5% this year, followed by 1.0% growth in 2010.

GDP in the euro area countries would drop 4.3% in 2009 and rise 0.4% in 2010, it said.

Japan’s economy would be down 7.1% in 2009 and grow 0.2% in 2010.

Only China and India would see growth in both 2009 and 2010.

China’s economy was forecast up 6.5% in 2009, and up 7.2% in 2010.

India would grow 4.2% in 2009 and 5.5% in 2010, according to IfW’s projections.

As for Germany's economy, the institute projected a 6.0% decline for 2009, followed by 0.4% growth in 2010.

Production in Europe’s largest economy was likely to have shrunk only moderately in the second quarter of 2009, following the strongest declines since 1974 in the two winter quarters.

In the course of the year, the situation in Germany would continue to stabilise, the institute said.

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